An American registered investment advisor based in Malvern, Pennsylvania has invested heavily in a company that backs the Chinese military, according to recent reports.
The Wall Street Journal reported that Baidu was excluded from a list of organizations that American firms were barred from investing in due to their ties with the Chinese military and government, fueling China’s economic standing.
The Executive Order, issued in November 2020, banned investments in identified firms and stated that "those companies raise capital by selling securities to United States investors that trade on public exchanges both here and abroad, lobbying United States index providers and funds to include these securities in market offerings and engaging in other acts to ensure access to United States capital. In that way, the PRC exploits United States investors to finance the development and modernization of its military."
Roger Robinson, chief executive of RWR Advisory Group and former chairman of the Congressional U.S.-China Economic and Security Review Commission said that not barring the companies “would be a recipe for America being held hostage to Chinese success in ramping up its investment exposure in the U.S. capital markets.”
RWR Advisory Group released a report last year that Baidu aligned with the 28th Research Institute of China Electronics Technology Group Corp. (CETC) in January 2018 to create the Joint Laboratory for Intelligent Command and Control Technologies in Nanjing.
According to the report, the objective was "to collaborate on high-tech military-civilian fusion projects in areas such as big data, cloud computing and artificial intelligence to bolster 'national defense information.'”
CETC constructs military-based information systems and was a former subsidiary to China’s Ministry of National Defense, the report states.
The data also states that Baidu is part of a Beihang University initiative that facilitated artificial intelligence specialists in the county with 60% of the funds geared toward defense research and development, including state run projects involving "military equipment and weapons systems with a focus on military aeronautic technologies (including intelligent UAVs)."
The RWR report also connected Baidu to Chinese military satellite system development.
According to Investopedia, Baidu's Apollo Program, run in conjunction with several global partners, "is the world's leading autonomous driving and AI program." Statcounter places Baidu's share of the Chinese search engine market above 83%.
Fintel reported that Vanguard, the company in question, is a big supporter of Baidu with its entity, Vanguard Group Inc., holding 9,834,728 shares, which account for 2.83% ownership in Baidu.
Another subsidiary, VEIEX - Vanguard Emerging Markets Stock Index Fund Investor Shares, holds 3,677,680 shares, accounting for a 1.06% stake in the company, according to Fintel.